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20 Best Manufacturing Practices

Best Manufacturing Practices
20 Best Manufacturing Practices
Lead Time Reduction
Reducción en los Tiempos de Orden/Producción/ Entrega
Streamlined Flow
Flujos Continuos y Eficientes
Quick Changeover
Cambios Rapido de Producto
Cellular Manufacturing (Focused Factories)
Manufactura por Celdas
Empowered Teams
Empoderamiento de los Equipos
Cross-Functional Teamwork
Trabajo en Equipo Multidisciplinario
Associate Involvement & Commitment
Participación y Compromiso de los Asociados
Process Reliability
Confiabilidad de los Procesos
Continuous Improvement
Mejoramiento Continuo
Quality In-Process
Calidad en el Proceso
Seamless Shift Operations
Continuidad en los Cambios de Turno
Standard Operating Procedures
Procedimientos Estándares de Operación
Goal Deployment
Despliegue de Metas
Visual Management Systems
Sistemas de Gestión Visual
Incentives, Rewards & Recognition
Incentivos, Premios y Reconocimiento
Plant Safety, Loss Prevention & Housekeeping
Seguridad Industrial, Prevención de Pérdidas y Limpieza
High-Performance Leadership
Liderazgo de Alto Rendimiento
Supplier Partnerships
Colaboración/Alianza con Proveedores
Cross-Training & Multi-Skilling
Capacitación Multidisciplinaria
World-Class Performance Measures
Medidas de Rendimiento de Clase Mundial
Faster, Better, Cheaper
In today’s competitive marketplace, plant managers must continue to look for ways to improve perational
effectiveness. Based on our experience in plant operations worldwide, we have identified 20 Best
Manufacturing Practices utilized by world-class companies to meet increasingly demanding customer
expectations and continually improve operating performance. Excellence in each of these areas can
improve your competitiveness, but collectively, they have a synergistic effect that can provide your
facility with a real competitive edge and preferred supplier status from your customers. Let’s take a brief
look at these Best Practices and learn how to create a leaner, more productive manufacturing operation.
1. Lead Time Reduction
In the 1960s and 1970s, manufacturers focused on cost reduction to gain a competitive advantage. In the
1980s, quality was all the rage and quality improvement initiatives were as numerous as the companies
that implemented them. The emphasis today is squarely on speed. The ability to respond to customer
demand quickly pays big dividends in terms of market share, but also helps to reduce costs and improve
Rapid-response manufacturing involves the continuous and relentless pursuit of lead time reduction.
Customer lead time is the time that elapses between order placement and order fulfillment. One of the
ways to reduce lead times is to eliminate waste in the manufacturing process. Basically, manufacturing
waste is any activity that adds time or cost to the product or its delivery without adding value. One of the
chief aims of Lean Manufacturing is to remove non-value-added steps (waste) from the value stream,
cutting costs, improving quality and speeding delivery. Through effective lead time reduction efforts,
many plants have seen lead times slashed by 50-90%. What’s more, this is often achieved with zero hiring
and minimal capital investment.
The first step to reducing lead times is to determine current lead times. For each product (or product
family), create a time allocation chart from customer order to product delivery, showing the time elapsed
for each process in the value stream. Then, analyze each step to identify ways to contract the time
required to complete it. Most companies find that the biggest time category is waiting. The longer the
production run and the larger the lot size transferred between work centers, the longer the product will
wait in-process. Long production runs may improve equipment utilization on a particular line, but they tie
up equipment and extend lead times. You’ll have to decide which is more important to your customers.
Lead time reduction is a continuous process. On the first iteration, we can usually identify ways to cut
lead times by 50% within 6 months. On the next analysis, another 50% may be cut. After several
iterations, it is easy to see how many manufacturers have reduced lead times from weeks to days and from
days to hours.
Should you pursue lead time reduction? The best way to answer this is to consider your customers’
current and future needs. Is there an opportunity to boost customer satisfaction or gain market share by
cutting response times? For more and more companies today, the answer is “yes”. Otherwise, you might
focus instead on a cost or quality improvement initiative.
2. Streamlining Flow
Streamlined (or Demand) Flow refers to the way production operations are structured. It is a powerful
technique that can dramatically cut inventory levels and manufacturing lead times. Traditional
manufacturing plants use a push production strategy. Production schedules are developed for each area
based on sales forecasts, each area runs at maximum capacity and material is pushed downstream. Under
a "push" system, it is easy to determine which operations are running at peak efficiency: their
downstream customers are buried in product. In an effort to maximize the utilization of each process,
(local optimization) mountains of inventory appear between work centers throughout the plant,
interrupting material flow, disconnecting work centers and extending response times.
In a pull system, material flow is triggered when a customer order "pulls" material from finished goods
inventory. Through a signaling process, the preceding work station produces a replenishment supply and
this work center signals its upstream work center to produce more units and the process continues up the
line. Production is always triggered by demand from the next work center. The objective of Pull
Manufacturing is to simplify production scheduling, minimize lead times and inventories, and to improve
linkages between processes for better corrective action. "Pull" better links the production process to
customer demand. Such systems are designed to respond with minimal cost and waste and to enable the
manufacturing process to flex to meet minor changes in demand volume and mix. The strategy is simple,
visible, and controlled and "owned" by shop floor personnel.
The tool typically used to control process flow is the kanban, a visual signal (a card, storage area,
electronic signal, etc.) that notifies the upstream operation whether additional product is needed at the
downstream operation. Permission to produce is given not by upstream to downstream processes but vice
versa, depending on the quantity of material in process or in queue at the downstream operation.
When there is a problem in a downstream operation that halts production, a signal is sent to temporarily
halt upstream operations to avoid build-up of inventory. Obviously, such a system requires that
production interruptions be rare to avoid halting production plant-wide. That is the reason pull systems
require process reliability. Under a traditional "push" scenario, operating problems are hidden because the
rest of the operations continue to produce WIP inventory.
Designing the proper pull system pays big dividends, but depends on the characteristics of each
manufacturing operation. While a pull system has inherent advantages over a traditional push system,
contrary to what some believe, not all product lines in every plant lend themselves to a pull methodology.
3. Quick Changeover (QCO)
The ability to change products quickly at the end of a production run serves an important goal: to be able
to schedule shorter production runs without sacrificing cost efficiency. As long as line changeovers are
lengthy, costly and inefficient, production will be scheduled in long runs to minimize changeovers and
plant personnel will continue to dread schedule changes.
To become a world-class manufacturer, you need to develop QCO (or set-up time reduction) capability.
Like lead time reduction, QCO is a continuous process that squeezes time out of a non-producing activity.
The chief aim is to increase manufacturing flexibility. It reduces costs because of the ability to schedule
shorter production runs and therefore store less WIP inventory. It facilitates continuous quality
improvement because shorter runs enable improved lot tracking, shop floor accountability and corrective
action. And it speeds delivery because products don’t spend a lot of time in queue waiting for equipment
that is in the middle of a long production run of another product.
To be effective at QCO, you need to be able to secure change parts quickly, install change parts precisely,
and produce the first unit perfectly. The first step in the set-up time reduction process is baselining. Each
step in the current procedure must be documented and analyzed before improvement can begin. The
standard method for reducing changeover time is as follows:
1. Assemble the QCO team (often called SWAT – Special Work Action Team) which may include
set-up technicians, maintenance technicians and manufacturing engineers.
2. Observe and videotape the set-up process, from completion of one run to the efficient production
of the next.
3. Document the changeover by classifying the elements of the process and the time they take.
Useful categories include: preparation work, removal of old parts, installation of new parts, run
preparation (adjustments) trial and buy-off/approval.
4. Begin the improvement process by analyzing each of the elements of the changeover and
eliminating unnecessary, non-value-added steps.
5. Classify the elements as either internal (those that must be accomplished while the line is down)
or external (those that can be accomplished while the line is running).
6. Develop a process to complete all future external changeover activities prior to equipment shut
7. Analyze the remaining internal elements and modify those steps so they can be completed
externally (prior to set-up).
8. Reduce the time required for internal elements. First select those steps that take the greatest
amount of time.
9. By using the standard problem-solving process, identify root causes and develop solutions to
start-up quality problems.
10. Lastly, analyze all external activities and identify ways to reduce this preparation time.
The above process can and should be repeated multiple times for a given operation. Many companies
have experienced 90%-plus reductions in set-up time after three iterations.
4. Cellular Manufacturing (Focused Factories)
Cellular Manufacturing (CM) represents an alternative organizational structure that seeks to reduce
manufacturing lead times, improve product cost, quality and delivery and create an associate involvement
and continuous improvement structure. CM consists of a series of product-focused work groups (cells)
which house all operations to manufacture a family of products. The cell is dedicated to manufacturing
those products requiring similar operations. While a traditional manufacturing environment is organized
functionally with similar machines in one area (for example, all molding machines in the Molding Dept.),
CM operates like a series of plants-within-a-plant, each starting with raw materials and ending with
finished product, with all operations being performed in the cell. Machines in manufacturing cells are
located within close proximity to minimize product transportation (a form of manufacturing waste) and to
maintain continuous flow with zero inventory between operations. The manufacturing cell is operated by
a team of empowered, multiskilled operators who have complete responsibility for quality and delivery
performance within the cell.
Guidelines for Successful Cell Implementation
1. Make a business case for CM. Many cellular efforts falter at this first critical step. It is important to ask
why you are implementing cellular manufacturing. Is it in response to a competitive threat? Are you
losing market share to competitors with better delivery performance? Are your customers demanding
shorter lead times than your current operation can deliver? Are they complaining about missed or late
shipments, poor quality or high costs? These are legitimate reasons to considering CM. The fact that
someone read about it in the business press or attended an interesting seminar is NOT a valid reason, and
will likely lead to failure.
2. Start with a success. There are two considerations here. First, identify products (or product families)
where productivity, quality or delivery improvements are highly visible and can make a big difference to
the organization. To identify product families, focus on the common set of operations needed to
manufacture the products in the cell. If an important customer is complaining about late deliveries on a
specific product line, it might make sense to create a cell around these products.
Second, consider a pilot cell in an area where workers are enthused and excited about participating in new
methods. Worker attitudes can make or break a cell implementation. Start with the right people and
success will be contagious throughout the rest of the organization.
3. Create the cell. Locate all resources, machines and equipment that will be used by the cell in a
dedicated area in the plant. In some cases, it will be impossible or impractical to relocate large,
centralized processes, so alternative arrangements must be made. To the extent possible, the cell should
be selfcontained, meaning that all the operations required to manufacture the cell's products should be
located together. Minimize the cell's dependence on resources or operations external to the cell. Again,
the key is to focus on the common set of operations needed to manufacture the products in the cell.
4. Cross-train workers in each of the cell's operations. One of the hallmarks of CM is multiskilled
operators who can move freely as needed between work centers within a cell. Providing training on
manufacturing concepts like lean manufacturing, lead times, process flow, set-up time reduction, total
productive maintenance, and problem-solving/continuous improvement methodologies will go a long way
toward building a high-performance manufacturing cell.
5. Fine-tune the cell's performance. Gradually reduce batch/lot sizes and setup/changeover times, while
involving cell members in improving quality and productivity. Institute a formalized continuous
improvement or kaizen system to make consistent improvements in cell cost, quality and delivery.
CM, when properly implemented, can result in huge performance gains for your operation. Lead time
reductions of 50-80%, quality improvements of 25-50% and product cost reductions of 10-30% are
5. Empowered Work Teams
Imagine that your shop floor is comprised into teams that are focused every day on solving operating
problems and continuously improving performance. Without prodding from management, these teams
review performance against goals, discuss operating problems and agree on and implement solutions. The
entire process is controlled by the team. Management provides coaching, guidance, training and support.
Many managers have tried to develop empowered teams during the 1990s to improve operating
efficiencies, solve production problems and achieve customer satisfaction goals, but were disappointed
when cost savings and quality improvements never materialized. Based on my research and consulting
work in plants world-wide, I’ve identified some of the key determinants of team success and some Best
Practices for developing truly effective, empowered teams. The biggest impediments to effective teams
 Unclear goals and purpose
 Ineffective team leadership
 Lack of group meeting or problem-solving skills
 Lack of clear roles and responsibilities
 Poor coordination with other teams and organizational units
 Lack of management support
If you’re thinking about developing a true team structure, experience shows that one of the surest ways to
kill a team initiative before you even start is to announce to the work force that you’ll be implementing
teams. The word team often conjures up a whole set of fears and concerns among associates, particularly
if you’ve had a history of unsuccessful “improvement” programs in the past. Instead, to borrow the Nike
tagline, “just do it.” Treat them like a team, and they will become one. This strategy has helped numerous
organizations develop team capability while minimizing the risks of failure. Rather than announcing that
all associates will be part of a team, help them become one. For example:
 Meet with them as a team, near the work area out in the plant
 Discuss plant goals and help them to develop supporting team goals
Identify resources & support needed to operate at peak efficiency
Conduct brief problem-solving discussions
Post team performance results and activities
Develop and post a team training matrix
Encourage them to give their team a name (e.g., The “Renegades”)
Help them develop a team mission
Develop a performance-based team reward system
Develop team leadership skills among your supervisors
Just what can empowered teams accomplish? They helped one manufacturer of airbags for sport utility
vehicles achieve a first-pass yield of 99.7% and a 100% on-time delivery rate. While teams aren't a
panacea for all that ails an organization, if implemented correctly, they can help you to achieve a
significant competitive advantage.
6. Cross-Functional Teams
Manufacturing plants have external customers and suppliers, but the organization itself can be viewed as a
network of internal customers and suppliers as well. For example, in a painting operation, the internal
customer might be the assembly line (for products.) The painting area’s internal suppliers might include
the injection molding operation (for products) the Maintenance department (for repair services) and the
HR department (for providing skilled personnel.) Surprisingly, even in many supposedly effective teambased organizations, there is often poor coordination, communication, cooperation and collaboration
between teams. This is unfortunate because a world-class organization is more than a group in
independent teams, but a network of teams working in collaboration. Often, problems with organizational
teamwork arise when allocating scarce resources or prioritizing projects. While business goals should
unify the organization, there are often inter-team or inter-departmental conflicts that inhibit process
improvement. This is why it is often helpful to consider not just team and department goals, but internal
customer-supplier relationships. For example, let’s say that one of our plant’s goals is to reduce cost per
unit by 10%. To support this objective, the Maintenance department identifies ways to cut its own
operating expenses and decides to reduce training or spare parts inventory. But these cuts may not best
serve their internal customer, the Operations group, because fewer spare parts and less training may result
in longer equipment downtime, and thus, higher total manufacturing costs. This phenomenon, known as
local optimization, impedes system-wide performance.
Developing internal customer-supplier
relationships is one solution to the problem. Here’s how it works:
1. For each group or team in the organization, identify the internal customers and suppliers.
2. Through surveys, interviews or discussions between the team, its customers and its suppliers,
clarify performance expectations.
3. Develop mutually agreeable goals centered around these expectations that are consistent with
plant goal.
4. Measure internal customer/supplier satisfaction along the value stream. Some companies use c/s
report cards, and part of each area’s responsibility is to maximize the satisfaction of their internal
5. Continue to improve the working relationship and satisfaction of customers and suppliers for each
team and reevaluate goals and expectations as necessary for any improvement initiative to be
effective, the entire organization must support it. Internal customer/supplier interfaces can be
instrumental in optimizing organizational teamwork and performance.
7. Associate Involvement
Contrary to what many believe, Associate Involvement (AI) is not the solution to all of an organization’s
challenges. In fact, if it’s done improperly, implementing AI can be worse than doing nothing at all! The
concept behind AI is that associates have valuable ideas to contribute and when managers help them to
implement those ideas, plant performance improves considerably.
Every world-class manufacturer has effective mechanisms for involving associates in operational
improvement and decision-making activities. When such a system is working well, the organization is
more responsive, performance goals are achieved more quickly, managers and supervisors spend less time
firefighting and associates are motivated to perform.
AI can take many forms:
1. Top-Down Communication – Associates receive information from management during a meeting.
2. Two-way communication – Associates contribute to a discussion with management, while the latter
reserves final decision-making authority.
3. Task Forces – Associates participate in temporary team meetings to recommend solutions to a specific
4. Quality Circles – Associates participate in more permanent meeting structures and recommend
solutions to problems specific to their work area.
5. Cross-Functional Teams – Associates participate in plant-wide committees and steering groups which
have some decision-making authority.
6. Work Teams – Associates meet regularly with their co-workers to identify operational improvements.
Some decisions are made by the team.
7. Empowered (Self-Directed) Work Teams – Associates have broad decision-making authority and
accountability for operating performance.
The most successful organizations make use of all AI options at the appropriate times. For example, a
safety or quality steering committee may be considered a task force or cross-functional team. Monthly allhands meetings would qualify as top-down communications. The idea is not to start scheduling lots of
employee meetings, but to use the right mechanisms and to ensure that they are achieving their intended
One comment I often hear from managers is: “Our people don’t want additional responsibility or
involvement. They want to put in their 8 hours and go home!”In talking with tens of thousands of
associates, I have a different perspective. Probably 20% of your workers DO want to be left alone. But
research and experience show that the other 80% prefer to be involved and would welcome
additional responsibility if the involvement process is executed properly. Typically, the “vocal negatives”
either leave the organization, mark time until retirement or, through peer pressure, be compelled to
cooperate -- or at least not impede. The trick is to focus on consistently engaging a critical mass of
associates at the highest levels of involvement.
With so many AI options and with the numerous advantages AI offers, why are so few plants good at it?
The answer is that AI cannot be mandated, nor is it even a “program”. It requires that everyone from
senior management to the front line truly believe in participative management and commit to doing it
There are four vital components to a fully engaged work force. Just remember “A.D.A.M”:
1. Ability – Associates need to know HOW to participate and contribute meaningfully. Just because
someone has operated a piece of equipment for 30 years doesn’t mean he understands it enough to
troubleshoot problems. In addition to job training, many world-class organizations have invested in
process training for associates so that they understand the WHYs and HOWs of the process. Also, training
in problem-solving and team skills give associates the ability and self-confidence to engage in problemsolving and continuous improvement, the keys to becoming world-class.
2. Direction – Associates need to understand where to focus their improvement efforts. With regular
coaching and communication from plant floor leaders, associates will better understand business
priorities, customer requirements and which areas need improvement. Without proper direction,
associates may discuss and solve problems, but they may not be the ones on which the plant needs to
focus, and real performance improvements may never materialize.
3. Authority – A truly empowered associate must have the authority to make decisions on the shop floor.
Depending on the process, line operators in many plants have the authority to shut down a line that is
producing substandard product if the problem cannot be immediately solved. But many teams have broad
authority to determine saleability of a product, manage a small budget for improvement ideas, suggest and
implement improvements without management approval, etc. Authority, however, cannot simply be
granted. It must flow from the prior training and direction that associates are given so that it can be
utilized appropriately.
4. Motivation – Associates have to perceive personal benefits from getting involved and assuming
responsibilities outside their day-to-day job duties. For some, this could mean more recognition and a
chance to voice an opinion. For others, it could be genuine appreciation from supervisors and managers.
For still others, more money, in the form of performance incentives, would be much appreciated!
One final point on AI. It is not a Quality of Life program. The only valid reason for engaging associates is
because it is this partnership that will make your plant more competitive.
8. Process Reliability
Process reliability is an effort to maximize equipment uptime and predictability in order to optimize
Productivity, Quality and Speed. One way to improve equipment reliability is through Total Productive
Maintenance (TPM). TPM is a philosophy of continuous improvement that seeks to achieve Zero
Breakdowns and Zero Defects through proper equipment maintenance and sustained operator
involvement. It helps to eliminate losses on the shop floor -- losses that increase manufacturing cost
through sub-standard quality, reduced plant capacity, reduced asset utilization and longer production lead
TPM recognizes six major losses:
1. Breakdown losses result in equipment downtime for repairs and are unexpected. Associated costs
include downtime, labor and spare parts.
2. Set-up and adjustment losses occur during product changeovers, shift change or other changes in
operating conditions. Ramp-up efficiency losses would be included in this category.
3. Minor stoppage losses are typically from zero to 10 minutes in length and include machine jams and
other brief stoppages that are difficult to record manually. As a result, these losses are usually hidden
from efficiency reports and are built into machine capabilities. When combined, they can represent
substantial equipment downtime.
4. Speed losses occur when equipment must be slowed down to prevent quality defects or minor
stoppages. In most cases, this loss is not recorded because the equipment continues to operate, though at a
lower speed. Speed losses obviously have a negative effect on productivity and asset utilization.
5. Quality defect losses are caused by the manufacture of defective or substandard products, which must
be reworked or scrapped. These losses include the labor and material costs (if scrapped) associated with
the off-specification production.
6. Yield losses reflect the wasted raw materials associated with the quantity of rejects and scrap that result
from start-ups, changeovers, equipment limitations, poor product design, etc. It excludes the category 5
defect losses that result during normal production.
Collectively, these six losses determine the Overall Equipment Effectiveness (OEE), which is a
multiplicative combination of equipment availability (losses 1 & 2), equipment performance (losses 3 &
4) and yield rate (losses 5 & 6). TPM seeks to reduce these losses. In a typical company, OEE tends to be
between 50-60%; “world-class” for most industries is considered to be 85%-plus.
TPM, often referred to as Autonomous Maintenance (which is technically one aspect of TPM) involves
small group activities with participation from Maintenance and Operations personnel on the shop floor.
The objective is to teach operators how to maintain their equipment by performing daily checks and
lubrication, replacing worn or damaged parts, performing minor repairs and detecting abnormal
conditions before a breakdown or loss occurs. The standard program involves seven steps:
Step 1: Initial cleaning
Step 2: Prevention of contamination
Step 3: Develop cleaning/lubrication standards
Step 4: Conduct thorough overall inspection
Step 5: Develop maintenance standards
Step 6: Develop process quality assurance plan
Step 7: Self-supervision and continuous improvement
The result is improved equipment reliability, higher-skilled workers who have "ownership" of their
equipment and increased productivity, quality and plant capacity.
9. Continuous Improvement
A Continuous Process Improvement (CPI) plan, when properly implemented and led, will help you
achieve business objectives faster while increasing associate job satisfaction. Let’s clarify what CPI is and
what it isn't -- and how it works in world-class operations.
First off, CPI isn’t a committee or individual responsible for “coordinating” ongoing improvement
activities. While coordinators serve an important purpose, they often function in a centralized reporting
capacity. Often, more attention is paid to measuring, collecting and reporting improvement data than to
actually improving operations! The coordinator role is most valuable when teams all over the plant are
actively involved in projects to improve specific manufacturing processes.
Also, CPI isn’t merely a goal-setting process. While continuous improvement goals are useful, having a
goal and having a plan for achieving it are two completely different things. Many managers spend two
months in goal-setting discussions and little or no time training their people and engaging them in
improving their processes.
Finally, CPI isn’t a request to employees that they submit lots of suggestions to make things better. While
suggestion systems can be an important element of CPI, improvements probably aren’t adequately
targeted to significantly improve your bottom line. So what is CPI?
CPI is an operating principle that basically says, “On a daily basis, all levels in our organization are
actively implementing means of reducing costs, improving quality and speeding delivery in each of our
processes.” That is, day-to-day focus on making small, incremental improvements in every facet of the
The basic approach to CPI involves 7 steps:
1. Measure current performance (use customer-focused key performance indicators to measure
productivity, quality and delivery).
2. Set operating level goals that are specific, measurable and actionable
3. Identify obstacles impeding goal achievement (a root cause analysis helps the teams to focus problemsolving efforts).
4. Develop solutions to improve performance (problem-solving process)
5. Execute the plan (the team agrees on an implementation plan, which includes specific responsibilities
and due dates).
6. Measure performance to ensure goal achievement and
7. Recognize and reward accomplishments (a creative rewards system recognizes individuals, teams and
the overall plant for a job well done).
Simultaneous improvement of all manufacturing processes is only possible with total plant floor
involvement. In high-performance operations, operators are trained in statistical process control and
problem-solving methods. Key Performance Indicators (KPIs) for each process provide information on
root causes of sub-standard performance. Responsibility for quality control rests not with the Quality
department, but with the operators themselves. Operators are often members of quality improvement
teams, charged with identifying the root causes of quality problems and eliminating them. They have
quick access to engineers and quality specialists to help with the elimination of defects.
Another approach to continuous improvement involves Kaizen Events or Blitzes. These are highly
standardized, rapid improvement activities are scheduled over a several-day period and involve a specific
process or area. Whereas CPI consists of small, incremental, on-going advances in operational
effectiveness, Kaizen Events seek to achieve larger, one-time gains in a specific area. The combination of
these two approaches can be quite powerful. A northeastern manufacturer and distributor of software,
through 124 continuous improvement events, cut $2 million in labor, material and other costs. In addition,
machine uptime improved to 99.87%.
10. In-Process Quality
Another characteristic of world-class operations is the ability, authority and accountability that shop floor
personnel have to control and improve product quality. When shop floor personnel are disconnected from
this important responsibility, some unwanted things occur:
1. Quality improvement is slow and temporary because the people most familiar with the operation
aren’t part of the solution
2. Associates remain apathetic about their jobs and about quality because they feel they have little or no
control over them
3. There are higher levels of scrap and rework, and therefore, higher manufacturing costs because shop
floor personnel are out of the control loop
4. High levels of customer quality satisfaction are only possible through costly and time-consuming
post-production inspection
5. The relationship between the Operations and Quality groups is strained
In world-class operations, there is a vitally important role that the Quality function plays. It provides a
host of services to support the Operations group and help them to control and improve quality:
Training in statistical process control (SPC) and other tools
Visual standards to assist operators in determining whether product meets quality specifications
QA functions that require centralized testing
Training to the shop floor in the technical aspects of the product
The line operator’s responsibility should include the following:
1. Be able to discern whether a product meets quality standards
2. Have the authority to shut down a line to correct a quality defect
3. Have the authority to pass or reject a product without relying on the Quality group or on the chain of
Have the support of the Quality group and supervisors if needed in making quality decisions
Be proficient in the use of quality tools to be able to control quality at the work center
Understand how to make process adjustments when necessary to control product quality
Understand the process well enough to determine root causes of quality problems or be able to
participate meaningfully in a quality improvement meeting
Certainly, some operations are very complex technologically. One person may not understand the
complex physics and chemistry enough to know immediately why a quality problem is occurring. But
shop floor operators need the ability, authority and accountability to ensure quality standards are
maintained and product quality continually improves, to the extent that the manufacturing process will
allow. Many organizations have initiated a Six Sigma improvement process, a rigorous, data-driven
strategy for improving a process using statistical data and problemsolving tools. Also, Statistical Process
Control (SPC), when properly utilized and understood by operators, can be an important part of a Process
Quality initiative. It is important to invest the time in training a few teams at a time and helping them
develop a comfort level in the proper use of new quality tools. A Six Sigma process requires significant
training and is best suited for those with a highly developed quality program and strong leadership and
problem-solving capability already present within the organization. For those will less mature quality
efforts, an SPC program is a better way to advance quality efforts at the early stages.
11. High-Performance Shift Operations
Multishift operations present unique challenges because of the potential for inefficiencies and
"disconnects" that can impair operating performance and customer satisfaction. Managing shift operations
can be like running several different companies at the same time. Each shift change brings a new team of
people with different skills, attitudes, needs and objectives. What is needed is a management strategy that
fosters common goals and a seamless flow of information, processes and products.
These are some of the problems that need to be addressed in round-the-clock operations:
1. There is competition but no cooperation or teamwork between shifts
2. Operating procedures are inconsistent across shifts
3. Process improvement is slow because it is difficult to establish consensus across shifts on a
proper course of action
4. Emphasis is on shift production quotas versus process improvement
5. When a problem occurs, the blame game starts. Management must intervene and sort out the
6. Associates on the late shifts are often excluded from daily business activities and improvement
7. There is a shift imbalance in terms of skills and support services, making high efficiency and
standardization difficult
8. Communication between crews at shift change is irregular and ineffective
9. Management support and visibility are largely absent after regular business hours
10. Management communications are limited to quarterly state-of-the-business meetings
11. Shift problems are considered necessary evils and allowed to continue year after year
Most multishift operations need nothing less than a complete revision of the 24-hour management system.
A good approach is achieving excellence in the 5Cs:
1. Communication - Ensuring effective cross-shift communication is one of the greatest challenges
for managers in round-the-clock operations. Arriving and departing shifts must have contact at
shift change so key information such as operating problems, production priority and process
improvement can be discussed. This helps eliminate operating errors, rework, scrap and quality
problems. The best systems include both verbal and written mechanisms, designed in part by the
people the will be using them.
2. Coordination - Despite the fact that employees typically report to separate shift supervisors, shifts
are, in fact, interdependent and must work in unison toward common goals. The lack of a team
concept across shifts leads to the problems typically associated with multishift operations. Many
companies have adopted cross-shift teams whereby all those working on a given process,
regardless of shift assignment, are teammates.
3. Continuity - Continuity is “built-in” for highly automated processes like those in the chemical,
paper and petroleum industries. But many batch and job shop operations shut down temporarily at
shift change. Shift change procedures must be modified to maximize equipment uptime and
maintain product quality across shifts. To avoid lost production time and reduced plant capacity,
early quits and late starts must be eliminated. Production priority must be known so that time is
not wasted searching for a supervisor to determine the day's schedule. Materials and supplies
must be set up in advance so time is not wasted locating, transporting and staging them.
4. Consistency - Operating procedures should not vary from shift to shift. Consistency in processes
minimizes quality problems and helps control costs and cycle times. It also facilitates problem
solving and corrective action because the "proper" procedures are known and followed on all
shifts. (See Standard Operating Procedures, page 15.)
5. Commitment - A committed, motivated work force is important in any organization. Managers
must ensure that non-day employees remain "connected" to the organization and do not feel
disenfranchised. The management team and support services groups must eradicate the '8-to-5
mindset' and recognize the unique needs of shift associates. This can have a positive effect on a
company's ability to manage turnover and retain sufficient staffing on nights and weekends.
Another important aspect of a high-performance shift operation is the shift schedule. The right shift
schedule can optimize equipment and capacity utilization, improve associate alertness and safety and
satisfy associates’ needs for quality time off. On the other hand, a shift schedule that is inappropriate for a
given plant can result in excessive overtime and idle time costs and create a safety hazard as fatigued, low
morale workers have inadequate recuperative time off. Each plant has specific operating requirements
(24/7, Monday to Friday 3 shifts, etc.) At the same time, each plant has different associate demographics
and therefore different preferences for time off, shift starting times, etc. There are rotating shift and fixed
shift schedules, 8-hour, 10-hour, 12-hour and hybrid schedules and a whole host of other schedule design
considerations. In fact, there are mathematically thousands of possible schedule variations.
Plant management’s task is to ensure that the plant is staffed so that operating costs are minimized, safety
performance is optimized and there is general satisfaction with the work schedule. In a multishift
operation, there will never be 100% schedule agreement and satisfaction as nights and weekends are the
nature of the business. But our work with plants world-wide shows that if shift schedules are designed
properly and implemented with the involvement of shop floor personnel, satisfaction can be 85% or
The basic process for developing and implementing the optimal shift schedule for your operation is as
1. Conduct kick-off meetings on all shifts
2. Analyze operational requirements and determine management boundaries
3. Present basic schedule options to associates, discuss business needs
4. Survey associates for schedule preferences
5. Feedback survey results; present final schedule options
6. Finalize all work/pay policies; associates vote on schedule for trial period
7. Discuss adaptation strategies with new schedules
8. Associates cast final vote for permanent schedules
12. Standard Operating Procedures
Put simply, standards represent an organization’s capabilities. If there are no standards, reproducibility of
results cannot be guaranteed. In many facilities, because shifts operate somewhat independently, over
time, procedures tend to vary based on individual preferences, training and experience. Left alone, this
can result in cost and quality problems. For example, in the auto parts industry, inconsistencies in
operating procedures lead to quality differences and can pose problems when parts do not fit well together
in final assembly.
In world-class plants, operating procedures simply do not vary significantly between operators or between
shifts; one operator does not feel the need to change all the equipment settings that the previous operator
spent eight hours perfecting. This is because the “proper” procedures are known and understood.
Consistent, detailed procedures are discussed and agreed to by representatives from each shift.
Consistency is also a requirement for ISO/QS 9000 certification, which requires up-to-date
documentation of process standards. It also facilitates problem-solving and corrective action.
For each manufacturing process, written operating procedures should be developed that:
1. Represent the proper way to run an operation
2. Are agreed to and followed exactly, every time
3. Are clearly posted at the work area
Are reviewed regularly and updated as necessary
5. Cannot be changed without a formalized process to ensure that key performance indicators will
be improved or maintained.
Obviously, shop floor personnel should be a part of this process. They are most familiar with current
procedures and are an excellent source of improvement ideas. In addition, they must buy-in to the final
procedure and follow it precisely.
13. Goal Deployment
In most companies, the goal system is not very effective in motivating performance. Each year, business
goals are established, and each month or quarter, management reviews progress against those goals. But
usually there is not a plant-wide strategy in place that specifies the actions to be taken to achieve
these goals. And rarely does the goal system unify the whole organization and generate action and
achievement on the shop floor. With plant operations spread out across multiple departments, areas and
shifts, a unifying force is needed.
Despite the best efforts of management, goal systems typically fail in at least three areas:
1. Associates do not understand what plant goals mean or how they are measured
2. Associates do not understand how to really impact performance against those goals on a day-to-
day basis
3. Most associates are not directly involved in process improvement efforts, but focus on getting
through their shift.
What is needed is a goal process that has five elements:
1. It outlines a few major plant goals that unify the organization;
2. It helps the shop floor to set specific, motivating goals for the various work
processes and teams;
3. It ensures that all employees understand the goals, how they’re measured and how to impact
4. It encourages team discussion and action on ways to achieve these goals; and
5. It recognizes associates, teams and the entire plant upon successful goal achievement
Each of these elements must be present to have an effective goal system.
High-performance facilities ensure that operating level goals are specific, measurable, understandable,
controllable and motivating for the work teams on the plant floor. For each process, goals are developed
which help associates focus on reducing scrap, meeting the day’s production schedule, minimizing
downtime and increasing output per labor hour. Then these plant floor goals are tied into broader plantwide objectives in order that associates can see how their efforts impact plant performance. Frequently,
work teams develop their own performance objectives in conjunction with their supervisor or team leader.
Operating level goals can be powerful. At one manufacturer of anti-lock brake systems, simple, real-time
metrics are displayed for the entire plant to see. Operators are trained to understand the numbers and the
results speak for themselves: defects cut 70%. Units per day per person increased 11 to 18. Volume
tripled while inventories dropped by a third.
14. Visual Management Systems
Sports would be pretty dull without the ability to measure performance and enjoy the satisfaction of
winning. A production facility is no different. Visual Management (also known as Glass Wall
Management) is a concept in which pertinent company information is shared throughout the organization
via a large Plant Scoreboard.
The Scoreboard displays:
The key plant goals
The supporting team/area goals
Trend charts that show progress against goals
Current improvement projects and status
A listing of plant teams with photos
In addition, area scoreboards can be developed at each team center to aid in team development and
communications. This team communications center might show similar information as the plant
scoreboard as it pertains to the team. It also often includes a training matrix and photos of all team
members, the teams’ name and charter or mission statement and a display of standard operating
procedures for processes that the team uses.
Many companies utilize charts in the plant to some extent. But how can you tell whether your visual
performance management system is working effectively?
Interview associates. Walk around the plant and ask people about the posted information.
Randomly selected associates should be able to tell you how the plant is doing in each of the key
goal categories. They should understand a little about the plant’s competitive situation and current
priorities and challenges, new products and opportunities.
Apply the “stranger” theory. A person unfamiliar with your operation should be able to study the
plant scoreboard and be able to answer the same questions within minutes. If they can, it is a good
indication that you are displaying the right things in the right way to communicate a basic theme
or message.
Here are the basic steps to developing a highly successful visual performance management system:
1. Identify 4-5 major plant goals and explain them fully plant-wide.
2. Chart performance against these goals with large colored graphs.
3. Engage plant teams in each area to develop shop floor goals that support the plant goals.
4. With team involvement, develop shop floor performance measures and ensure understanding
5. Measure and chart shop floor performance as close as real time as possible. If possible, teams
should supply the data.
6. Recognize those teams that achieve their goals or make substantial progress.
Common plant goals might include some of the following:
Cost per unit manufactured
Customer complaints
First-pass yield
Market share
Customer satisfaction survey data
OSHA recordables
Output per employee
Manufacturing lead times
On-time delivery
Some possible team goals include:
Cycle time at work center
Scrap/rework generated at work center
First-pass yield at work center
OSHA recordables for team
Internal customer satisfaction performance
Degree of employee cross-training
Line changeover time
Equipment uptime
Output at work center per employee
Tips from world-class operations:
1. In plant-wide performance review meetings, spend more time recognizing accomplishments than
pointing out areas for improvement. While improvement areas need to be addressed, people
respond much more favorably to praise than to criticism.
2. Also, ensure that employees understand what the metrics mean. For example, if you measure
first-pass yield (the percentage of products meeting quality standards the first time through the
process), make sure they understand what events will lower the yield.
3. Minimize the number of plant goals and metrics posted. Management may find 15 different
productivity measures useful, but one or two are usually adequate for shop floor personnel.
4. Post sub-goals to enable shop floor associates to see clearly how their efforts help drive business
5. Measurements are more credible and better understood when conducted by the teams themselves.
If possible, have the teams measure, report and improve their own performance.
15. Incentives, Rewards & Recognition
In surveys of plant associates, the statement that consistently received the poorest grade is “Management
recognizes employees for a job well done.” As you think about incorporating these Best Practices into
your operation on your journey to world-class status, you will need to answer an important question:
“What’s in it for your associates?” The promise of greater job security is not very convincing
World-class facilities are implementing creative compensation, incentive and recognition systems that
reward everything from skills acquisition to teamwork to continuous improvement in operating
performance. Whatever plan you use and whether incentives are financial or not, an effective system has a
few basic requirements. It must be relatively simple to understand, measure and administer; it must
provide a clear line of sight between performance and reward; and it must include a mechanism for
actually engaging associates in a process of continuous improvement.
When incentive pay is based on factors that do not directly impact plant operating performance, it is
unlikely that plant goals will be achieved in a timely manner. The purpose of an incentive system should
be to unify the organization to achieve well-defined performance goals like cost reduction, quality
improvement and customer satisfaction. The most common financial plans include cash profit-sharing,
gain-sharing and goal-sharing. In addition, there are numerous non-financial recognition plans that have
proven to be extremely effective in building associate commitment and in fostering a partnership between
managers, supervisors and shop floor personnel.
It is possible to design effective incentive systems that reward at different levels, based on individual
contribution, team performance or overall plant performance. But it should be tied to performance
objectives that actually improve the bottom-line. Based on our experience in manufacturing plants
throughout the U.S., we recommend a system that rewards employees for actually achieving plant and
business goals. When costs are reduced, quality is improved and customer satisfaction is achieved, then
the organization is truly successful, and the plan is self-funding.
16. Plant Safety, Loss Prevention & Housekeeping
In addition to leadership in Cost, Quality and Delivery, world-class operations also experience nearperfect safety performance. It’s no coincidence. The same tool and strategies that make an operation
leaner and more competitive also make it a safer place to work. At one food processing plant, the number
of lost time accidents fell by 90% over a two- year period. The plant-wide effort to improve safety
performance consisted of four key elements:
1. top management support and commitment
2. supervisor training and support of the safety effort
3. employee awareness and vigilance
4. regular employee training
The first requirement for excellent safety performance is management support and commitment. In
America’s safest plants, safety performance is the first item on the performance review agenda. Often, the
plant manager personally reviews and signs off on all accident/incident reports. And it is the
responsibility of senior management to ensure that the next three requirements are met.
The next element is supervisor training and support. The plant cited above trained supervisors in safety
topics and involved them directly in developing safety training for shop floor associates. Supervisors were
trained in coaching techniques and taught how to identify unsafe working conditions and how to
encourage safe work practices. In addition, supervisors were trained in thorough accident investigation
reporting and learned how to identify root causes of incidents and how to prevent their recurrence.
Making supervisors accountable for the safety performance of their people and providing the right
training will enhance their effectiveness and dramatically improve site safety performance.
The third requirement is associate awareness. In a complex manufacturing environment, there are many
priorities and action items, and maintaining focus is a challenge. A creative approach to associate safety
awareness often helps. Many plants devise recognition systems, games, contests and visual means of
keeping safety constantly on the minds of associates. The plant above found that not only does safety
awareness and performance increase, but morale and job satisfaction improve as well.
The final requirement for near-perfect safety performance is regular associate training. Through the use of
videos, operator-developed job safety training procedures and supervisor demonstrations, proper lifting
techniques and other relevant safety training topics should be provided regularly. Safety training is
especially important after extended shutdowns or periods of time off. We’ve found that reorientation
training typically cuts start-up accidents by up to 70%.
Another best practice world-class companies use is known as 5S. 5S is basically a plant housekeeping
system that encourages safety, organization and cleanliness in order to prevent accidents, prepare the
organization for lean manufacturing and TPM programs and create a company-wide discipline for other
more complex improvement efforts.
The term 5S stems from the Japanese words Seiri (sifting), Seiton (sorting), Seiso (sweeping), Seiketsu
(standardize) and Shitsuke (sustain). We recommend devising your own acronym so that the
housekeeping effort is “owned” by your organization. The terms aren’t important, but the steps in the
process are. The first deals with clearing the work are of those items not used regularly. The second step
deals with identifying and labeling items that are needed in the work area so that people have easy access.
The next element deals with regular maintenance of a work area so that neatness and order are
continuously maintained. The fourth component relates to standardizing the housekeeping activity
through the use of formal audits with clear responsibilities. Finally, the fifth element deals with sustaining
the effort by continual reinforcement, followthrough and example-setting by management Many
companies underestimate the importance of a formalized housekeeping process. Our experience has
shown that mastering housekeeping develops important capabilities and discipline that will be necessary
for future improvement efforts. In addition, a cleaner workplace reduces accidents, improves morale and
cuts costs!
17. High-Performance Leadership
It all starts with effective leadership. Achieving a productive, profitable plant operation requires strong
leadership at the operating level. Without effective first-line leaders, even the most talented, wellintentioned management team won’t be able to execute effectively on the shop floor. And most associates
would prefer working for an outstanding leader in an average company than a mediocre leader in a top
company. In other words, the right leadership pays dividends in improved employee retention and job
satisfaction. So what should the role of the supervisor be in a high-performance operation? How can we
develop effective plant leaders? Gone are the days when a supervisor’s ideal role was to dole out work
orders and fight fires. In today’s high-performance organizations, a first line leader must function more as
a coach, utilizing the talents of his or her people to execute a winning strategy. The supervisor must be
able to work with his or her team to set specific operating goals, monitor performance, provide guidance
and training, review progress, provide feedback, encourage high achievement, troubleshoot problems and
implement solutions, all with minimal prodding from management. Such are the traits of a highperformance leader.
The high-performance leader demands accountability for results but works in partnership with associates
to help them continuously improve operating performance while maintaining a high morale work
environment. The high-performance leader also functions as a mini-plant manager, making broad-based,
informed business decisions that benefit the overall company rather than just his or her specific work
area. The plant leader needs sufficient technical knowledge to make the right operating decisions, but it is
even more critical that he possess solid people management skills in order to ensure efficient operation.
Even in plants that utilize complex technology, it is people that have a tremendous impact on process
efficiency and the rate of performance improvement.
Traditional Supervisor Role:
Ensure proper deployment of crew
Enforce attendance policies
Ensure that quotas and standards are met
Enforce safety regulations and other management policies
Discipline associates as needed
Communicate with other shift supervisors
Maintain housekeeping standards
High-Performance Leader Role:
Understand business/financial metrics
Keep associates informed as to goals, priorities & direction of organization
Help associates obtain the supplies, information and tools to do their jobs
Play an active role in associate training & development
Provide regular performance feedback and quarterly performance reviews
Listen and acts on associates’ ideas, suggestions, and concerns
Provide effective coaching and fair discipline
Encourage associates to improve operations
Facilitate problem-solving and process improvement discussions with crew
Conduct team meetings on a regular basis
Encourage cooperation & teamwork between shifts and work groups
Management support and visibility on the shop floor are crucial to a well-run plant operation. In most
industries, there is a direct correlation between management visibility on the shop floor and plant
profitability. Too often, managers rely on the “chain of command” to provide leadership and shop floor
communication. But the type of support we’re talking about cannot be delegated. Some call it
Management By Walking Around, but it is more than that. Plant managers in high-performance
operations build a “partnership” with the work force by maintaining focus on plant objectives, providing
guidance and support and even coaching and development of supervisors. It is much more proactive
than just “wandering around.” When operators see senior management in the plant on all shifts asking
questions and showing a genuine concern and interest in the day-to-day operational issues they face,
associate job satisfaction and morale soar. When associates see evidence that management is committed
to improving plant floor operations, they too, feel a greater sense of pride and ownership.
The purpose of a visible management team is not to micro-manage the minutiae of plant operations, but to
“connect” with the shop floor and to experience the pulse of the operation first-hand. Managers in worldclass operations schedule regular in-depth walk-throughs of the manufacturing line with shop floor
personnel and supervisors to discuss their manufacturing capabilities and problems. For high-performance
operations, a good rule of thumb is as follows: the site manager and key staff department heads (HR,
quality and maintenance) should see each team on each shift once a week. The operating department
manager should see all teams/shifts in his area every day. Senior management also has the obligation to
develop and support a strong supervisory team. Top management must help clarify the supervisor’s role,
providing training in weak areas and day-to-day coaching to develop effective leaders that work
cohesively, rather than independently. Finally, senior management must ensure that the organizational
structure facilitates plant floor leadership, support and communication.
Having too many levels in the organizational hierarchy is not only expensive, but actually impedes
communication up and down the organization and insulates the senior management team from day-to-day
shop floor activities and problems. Developing high-performance leaders often requires a complete
modification of the supervisors’ role, increased support and visibility on the part of managers,
development of leadership skills and an organization structure that facilitates communication and a sense
of common purpose.
We helped one organization realign their leadership structure to streamline communication, improve
management coaching and better utilize the talents of the leadership team members. The result:
supervisors excited about their new roles and supportive of the change, which paved the way for other
improvement efforts.
18. Supplier Partnerships
World-class manufacturers recognize that developing strategic customer-supplier relationships is a key to
long-term success. Consider that, on average, over 50% of a product’s manufacturing cost is raw material
purchases from suppliers. It makes sense, then, to establish a partnership between key suppliers to receive
the best combination of raw material cost, quality and delivery.
Developing strategic supplier partnerships are vital to World-Class Manufacturing. By working as
partners in product development and improvement, both customer and supplier benefit. Strategic
partnerships increase operating efficiencies by improving the flow of materials and information, resulting
in lower inventories, higher quality and lower total costs. Many world-class manufacturers have begun
moving away from a supplier selection process based primarily on cost to one that focuses on continuous
improvement in quality, delivery and, finally, cost. By working closely with a limited number of suppliers
and assisting them in applying Total Quality concepts like Statistical Process Control, Six Sigma and
Quality In-Process, raw material defects and in-coming inspection can be eliminated. By partnering with a
few suppliers in close proximity and helping them reduce lead times, a reliable flow of materials can be
delivered (often, directly to the production line) with lower inventories, higher quality and faster
response. Finally, close strategic partnerships with a few select suppliers will ultimately be more costeffective because of the joint effort to eliminate manufacturing waste in both companies. To achieve
strategic partnerships with suppliers, it is necessary to implement a supplier selection, qualification and
certification process. Start with your primary suppliers (those 10-20% of vendors that supply 80-90% of
your products).
Develop a detailed assessment tool to measure supplier performance according to cost, quality and
delivery. Then, once the supplier is certified, both companies can work closely together to implement
projects to consistently improve the supplier’s product cost, quality and delivery.
19. Cross-Training & Multi-Skilling
World-class operations invest between 40 and 120 hours of training per year for each associate, while the
“average” plant can never find the time. The solution is clear: commit to training! All of the improvement
initiatives and management prodding won’t mean very much without a skilled, capable work force. A
good example is continuous improvement. One facility we worked with had a continuous process
improvement program in which shop floor personnel were encouraged to submit suggestions for cost
reduction, quality or safety improvement. The program was even backed by financial rewards when
suggestions were implemented. The program was a flop. The primary reason? Lack of associate training.
Associates need job skills training to understand the “why” of their job, in addition to the “what.” They
need technical skills training so they can understand the process itself. How can we expect improvements
if they don’t understand how it works? Associates need problem-solving skills to be able to analyze a
problem, identify the symptoms, look for possible causes, verify the causes, develop solutions and
implement them.
Companies that provide this training often experience dramatic improvements in operating performance.
Finally, associates are often more effective when trained in interpersonal and communication skills. As
organizational teamwork becomes more critical, employees and supervisors will need the skills to be able
to coordinate across functional areas. Associates need to learn the concepts of Lean Manufacturing,
Manufacturing Waste and Value-Added. As they begin to understand alternative ways of looking at their
jobs, waste and inefficiency are no longer tolerated. To determine the skills needed in a particular area, a
training matrix if a useful tool. The training matrix lists all the associates and all the required skills in a
given area and denotes which associates possess which skills. Skills deficiencies are readily apparent and
the training matrix aids the team leader in developing a comprehensive needs-based training plan for the
In many team-based organizations or those utilizing manufacturing cells, cross-training and multiskilling
are vital to flexibility and high performance and formalized training programs are a must. To encourage
skills acquisition, some companies have adopted a pay-for-skills or pay-for-knowledge (PFK) program
which rewards skill achievement with permanent wage increases.
Other companies build training time directly into the work schedule, so that training an entire team is
possible. Training and development of associates and supervisors is vital for any prospective world-class
operation. Just make sure that training emphasizes onthe-job application and return on investment of the
training dollar. In addition, provide training just-in-time – just before it is required, rather than in a
plantwide burst of activity.
20. World-Class Performance Measures
Every organization uses quantitative measures to assess performance, but for world-class operations, they
are a critical part of their improvement strategy:
Performance metrics are used to drive higher levels of performance.
In worldclass operations, metrics are not merely reports of past performance, but real time tools utilized
as close to real time and as close to the shop floor as possible in order to effect performance during the
manufacturing process. An example would be In-Process Quality Control by operators who, rather than
just report quality levels at the end of a shift, use line data to adjust and improve the process to achieve
world-class quality standards.
Performance metrics are generated, controlled and influenced by shop floor personnel.
When performance goals are developed by operators, the numbers are more credible and employees feel
more committed to achieving good results. Metrics generated in an office and fed back to the shop floor
tend not to be as motivating. They are “management’s numbers”, a directive to be followed, rather than
“our numbers” in which pride is taken in improving them.
Performance metrics are dynamic, not static.
World-class operations do not measure the same performance indicators year after year. They have
systems for achieving aggressive goals quickly, and once those goals are achieved, they identify other
measures that drive continued improvement. In addition, metrics are used not just to measure
performance, but the rate of performance improvement. For example, a company may start by measuring
On-Time-In-Full (OTIF), a common customer service metric that indicates the percentage of time that
orders are shipped completely and on-time. Once this metric reaches 100% relatively consistently (a
world-class benchmark), this metric is dropped and replaced by a more aggressive performance indicator,
such as Customer Lead Time with 100% OTIF. Here, the high OTIF is assumed, and the new metric
becomes Lead Time. It becomes no longer adequate just to ship orders completely and on time. Lead
times on those orders are now measured and improved within the context of 100% OTIF. The continuous
“raising of the bar” is consistent with continuous improvement and world-class competitiveness, but you
need to make sure systems are in place to assist the organization in making continuous progress towards
goal achievement.
Performance metrics rally the entire organization.
In most manufacturing facilities, the only group that really rallies around performance goals is the
management team. To become a world-class operation, all levels within the organization must be engaged
and committed to achieving increasingly aggressive plant objectives. There are a variety of options
successful manufacturers have used, including shop floor involvement in goal development, performance
incentive and reward systems, team coaching, etc. In fact, developing and sustaining this commitment
plant-wide is probably the single most important thing you can do to achieve world-class manufacturing.
Performance metrics are developed based on global competitiveness considerations. Too often, plant
performance goals are developed based on arbitrary management consensus.
For example, our cost per unit last year was $1.50 per unit, so our goal for this year is a 10% reduction to
$1.35 per unit. Why not $1.25 per unit? Or $1.33? If goals are to be motivating and credible to all
stakeholders in the organization, it makes more sense to establish goals on the basis of world-class
competitiveness and customer requirements. For example, if our cost per unit is $1.50 and an overseas
competitor can deliver the same quality product for $1.19, then maybe our goal should be $1.18 per unit.
If our current lead time is 6 weeks and out customers are demanding four week response times, maybe
three weeks is an appropriate measure. This concludes our discussion of the 20 Best Manufacturing
Practices. As mentioned earlier, excellence in each of these areas can improve your productivity and
profitability, but together, they have a powerful synergistic effect that has helped many facilities achieve
industry leadership and global competitiveness.